Wipro Limited (WIT) Q4 2022 Earnings Report, Transcript and Summary

Ladies and gentlemen, good day, and welcome to the Q4 FY 2022 Earnings Call of Wipro Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I’ll now hand the conference over to Ms. Aparna Iyer, Vice President and Corporate Treasurer. Thank you, and over to you, Ma’am.

Thank you, Margaret. Warm Welcome to our Q4 2022 earnings call. We will begin the call with business highlights and overview by Thierry Delaporte, our Chief Executive Officer & Managing Director followed by a brief overview on our latest acquisition Rizing by Rajan Kohli, Managing Partner, iDEAS Business Line; and then a financial overview by our CFO, Jatin Dalal. You also have with us as a part of the management, Stephanie Trautman, our Chief Growth Officer; and Saurabh Govil, our Chief Human Resources Officer. After the initial comments from the management, the operator will open the bridge for Q&A. Before Thierry starts, let me draw your attention to the fact that during the call, we may make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act 1995. These statements are based on management’s current expectations and are associated with uncertainties and risks, which may cause the actual results to differ materially from those expected. The uncertainties and risk factors are explained in our detailed filings with SEC. Wipro does not undertake any obligation to update the forward-looking statements to reflect the events and circumstances after the date of filing. The conference call will be archived and a transcript will be made available on our website. Over to you, Thierry.

Thank you, Aparna, and good evening, everyone. Thank you all for joining us today. For those of you joining us from the U.S., good afternoon. Friday are often known to bring good news, so today is no different at least for us. In my opening remarks, some of the year that has gone by, I’ll elaborate the demand environment, provide details on sectors, markets, service offerings, and share our business outlook for the quarter ahead. I’ll start by acknowledging that we’ve had an outstanding year. We delivered revenues of $10.4 billion at an industry leading growth of 27% plus in constant currency terms, I’d say, crossing $10 billion of revenue is a significant landmark for us, and we are now even higher. Revenue growth has been our fastest ever in absolute terms, we’ve added one-fourth of our revenue just this year. Our order bookings in annual contract value terms grew 30% year-on-year. And we are finishing off the year with the highest ever pipeline. Through the year, we’ve made significant investments both organic and inorganic, strengthening our solutions, our go-to-market, the leadership team as well as the broader talent pool. We have added over 45,000 new employees on a net basis, which is also the highest ever. We also continue to invest in our internal transformation. We know this will bring agility into our processes and help us serve our customers better. Operationally, we delivered 17.7% operating margins, which is ahead of our stated range. Finally, our net income in absolute terms is the highest ever. It grew by over 13% year-on-year and EPS expanded by 17% year-on-year. [Order has taken] [ph] a tremendous amount of discipline and determination to remain resolute in our pursuit of growth and execution excellence. I’m proud of what we’ve been able to achieve. Now, on to our Q4 performance and the demand environment. Our revenue growth during the quarter was at 3.1% in constant currency terms and 28.5% year-on-year. Look at it we’ve been consistently growing at or over 3% for 6 quarters now. Our growth continues to be broad-based across all our key markets, service offerings, and in most of our sectors. During the quarter, we had a net addition of over 11,000 colleagues, which sets us up well for future growth. Business environment itself is still very good. The demand for IT services is strong. Propelling our business forward is reflected in the state of our pipeline, our order bookings and our overall growth rates. In fact, look at the order book this quarter has grown 38% year-on-year in terms of annual contract value. Continue to close large transformation deals and see rapid expansion in small- and mid-sized deals as well. This represents growth in our existing accounts, as well as the expansion of our market portfolios. [Calling a table] [ph] is the pivot to high growth services as we help our clients transform and digitize their businesses. That significant wins that put design at the center of the experience and combines our iCORE and iDEAS capabilities to re-imagine IT to re-imagine back office and customer experiences, as continued focus on our hyper scalar partners. This will not only help us win more in the market together, but it’s also providing the alignment and investments we need to scale talent, assets and industry solutions for the future. For example, our industry alignment with Microsoft has strengthened our partnership dramatically. We work closely with Microsoft to define and take to market solutions that are focused on established priority scenarios that align with Microsoft industry Cloud Vision. We’ve chosen to prioritize BFSI, Retail, and Energy and Utilities, where we will have a sharper focus, ultimately delivering faster time to, value rapid digital transformation, and a simplified Microsoft customer relationship focus. Similar approach with ServiceNow has led to Wipro being recognized in the partner maturity index at the far upper right hand of the quadrant. In the joint industry solution space, continue to explore here that combined novel first-of-its-kind solutions with broad industry leading partners and coalitions to create innovative impactful platforms. A great example of this is the Cloud Car platform for software defined vehicles, which we announced earlier this year, the Mobile World Congress. We’ve brought together, we pose for stride cloud services and engineering capabilities with more than 40 different partners to deliver an integrated cloud native solution. This is helping automakers, innovate faster and at lower costs, while keeping software defined vehicles digitally relevant for years to come, but decoupling previously integrated software and hardware. Our FullStride Cloud Services has had an impressive year since its launch in June 2021. Our cloud ecosystem revenues also grew at an accelerated pace of over 31% in the fiscal year 2022. On the M&A front, we have continued to pursue strategic steps very aggressively. A more recent acquisition, in particular, Capco, which we are celebrating today, the first anniversary of the acquisition performing very well, we’re very pleased to report that Capco has had a very healthy double-digit growth this year. They’re ahead of plan together. We have had over 60 synergy wins across markets. Most of you will know we’ve announced also 2 more acquisitions in the last few days. The first one is Convergence Acceleration Solutions or CAS Group. They are a U.S. based consulting and program management company focusing on the communication sectors. They specialize in driving large scale business and technology transformation. CAS Group’s client relationships and strong domain expertise combined with Wipro’s execution capabilities will deliver an end-to-end professional services solution, but also immediate impact on clients. We can now provide our clients with services ranging from strategy development and planning to execution and implementation. Second acquisition that we announced just earlier this week is Rizing, a global SAP consulting firm, one of the leading strategy partners in the world for SAP. Rizing will become a very critical extension of Wipro’s SAP Cloud practice, and Wipro FullStride Cloud Services. Rajan Kohli is on the call today, will share more details on the deal. On to the operating margins now, we delivered profitability of 17% in Q4, adjusted for Capco, our largest acquisition. This will be well above the pre-pandemic margin levels. I would now provide some finer details on market, service offerings and sectors. Our markets grew double-digit, but the Americas and Europe our top 2 markets, grew at 28% and 36% year-on-year, respectively in Q4, and 26% and 39% year-on-year in FY 2022. Let’s look at the different market units. In Americas 1, we grew 22% year-on-year in Q4 with all sectors showing strong growth. For the full year, we grew 21% year-on-year. Communications, Media and Information Services grew 28%. Consumer Goods and Lifesciences grew 26%. Healthcare and Medical Devices grew 17%, while Technology Products and Platform actually grew 34% year-on-year in the quarter. In Americas 2 now, we grew 34% year-on-year in Q4 and 30% in FY 2022. We will show there was broad-based double-digit growth across all sectors in the quarter. The order book in terms of annual contract value grew over 56% year-on-year in Q4. Now, let’s look at Europe. A European business has delivered an outstanding year-on-year growth of 36% in Q4 and 39% for the full year. Germany – now Southern Europe have grown over 1.5 time in size. Benelux grew 23% and our UK business grew 39% year-on-year. Finally, our APMEA market grew at 14% year-on-year in Q4 and 9% in the year 2022. Australia, New Zealand and Southeast Asia are growing in double-digits year-on-year for the quarter as well. The order booking, again, annual contract value terms are looking healthy with 22% year-on-year growth. We remember customer relationships remain the priority. Our top 5 customers grew 35% year-on-year, our top 10 customers grew 34% year-on-year. In the last 12 months, we have added 8 customers in the more than $100 million bracket and 10 customers in the more than $50 million bracket. Now, from a service offerings standpoint, our iDEAS Global Business Line grew 39% year-on-year in Q4, and 35% in FY 2022. Most of the sub-practices showed healthy double-digit year-on-year growth led by domain and consulting, which literally tripled in size. Engineering services business grew 26% year-on-year in Q4, which is compounded quarterly gross rate of 6% over the last 4 quarters. Now, our iCORE Global Business Line grew by 15% year-on-year in Q4 and 17% in FY 2022. Last, most sub-practices grew in double-digits on a year-on-year basis to digital operations and perform led growth was 18% year-on-year for the full year. Now, the kind of deals, we are winning are very promising, for example, global on-demand education platform, a selected Designit as its campaign and media strategy partner. Designit will help them with new ways of engaging on digital channels to deepen brand recognition in global markets. Another interesting example is with a leading U.S.-based foodservice distributor, they selected Wipro as a strategic partner to drive profitable market share [in accordance] [ph] omni-channel initiatives, the next generation service platform, and best-in-class insight and analytics. So, more example worth sharing, but I’d like to now focus on talent and our go-to-market strategy. Pleased to redraw that, in line with what I had shared with you last quarter, our quarterly annualized attrition rate has moderated by 500 basis points. We doubled our fresher intake for FY 2022 when compared to the previous year, and our plan is to double this in FY 2023 as well. Although, we have decided to increase the frequency of promotion cycles of 70% of our colleagues in junior bands, to now a quarterly basis. No doubt, leadership oversight is now deeper. The presence of senior leadership in locations outside India has improved by 16 basis points – percentage points. It’s also relevant to know that nearly 50% of our leadership hires, in the gross office and in the customer facing global account executive roles. This means we are strengthening our front lines and sales teams. For the last 21 months, we have improved ethnic diversity in our senior leadership by 24 percentage points and gender diversity in the leadership has nearly doubled. I’m proud of this. And we will continue to build a more inclusive workforce in the coming years. We always, we continue to do business responsibility, in particular humanitarian crisis in Europe as had our attention. We don’t have any material exposure in the affected regions. Many of our employees in the neighboring countries, Romania, Poland, and personally joined relief efforts providing food and shelter for 1,000s of displaced people. Our employees in Romania volunteering to manage a dedicated helpline to support those in needs, we’ve also created an employee donation program and matching it to the dollar doubling the available funds. We have also partnered with Project Hope, emergency response team and European partners are providing critical medical supplies, but also assistance to refugees. I can confirm that Wipro will always stand by the principles of democracy, justice and equality. For a close word on our group for the next quarter. We’ve guided for revenue growth of 1% to 3%, which will translate the growth of 16% to 18% on a year-on-year basis in constant currency. While we don’t provide an annual guidance, I want to confirm that we expect to grow in double-digit for FY 2023 as well. Margins for the medium term we hold the 17%, 17.5% then, however, for the next 2 to 3 quarters we will see slightly lower margins. This is because of the investments we have made that I spoke to you about earlier. In summary, we’re pleased with the current business momentum and very optimistic of further strengthening, it going into the new financial year. All our key markets are growing on a year-on-year basis and that is the solid foundation, we are starting FY 2023 on. On that note, let me now welcome Rajan. Rajan Kohli, who will provide more details on our latest acquisitions of Rizing. Rajan?

Thank you, Thierry. It’s my pleasure to say a few words about our acquisition of Rizing. SAP is the market leader in ERP supply chain management and human capital management. It is growing rapidly due to increase cloud adoption and the post-pandemic economic recovery. Meanwhile, with SAP, the comprehensive cloud ERP offering is gaining traction as a first company develops new cloud-based business models to fuel their growth and transformation. Given this deep and broad growth profile for SAP, this is strategically important acquisition for four reasons. One, this presents complementary capabilities, I don’t see industry expertise in SAP enterprise asset management, human capital management and a typical consumer industry position them as a [best offer] [ph] provider of clients complex SAP transformation. This offers cost [ph] opportunities into our clients as well as upsell to meet with customer. Second, complement with customers in the industry, where we have strong presence, while we enhances our existence position of strength and leadership in industries such as quality [ph], utilities, manufacturing, retail, fashion, all consumer that whole roster of complementary Fortune 3000 customers. Third, widely [lot of us local presence] [ph] across strategically important geography, U.S., Canada, Australia and Germany with over 1,300 experienced SAP consultants in 16 countries. Add more onsite presenters even more important when we leave with onsite countries. Fourth, why this strong SAP total consultant expertise will advance Wipro’s capability? Why does the same time, Wipro’s broader consulting and digital transformation capability will give valuable clients access to a complete portfolio services. The joining of Rizing with Wipro could not be better time given the growth we have seen in the SAP markets and the opportunity to support clients in their transformation to become a guide and intelligent enterprises. I’d now like to hand over to Jatin Dalal, our CFO for financial highlights of the quarter. Over to you, Jatin.

Thank you, Rajan, and I will quickly cover the financial highlights. We had an excellent year, we grew 27.3% in reported terms, 28.5% in constant currency terms. We delivered 17.7% in operating margin. At 19% ETR which resulted in an industry leading EPS growth of 17%. We delivered and converted consistent cash flows. Our operating cash flow as percentage of net income was 91%. Our free cash flow as a percentage of net income was 75%. We had after paying dividend that we declared in March end, $4.6 billion of cash of cash gross of debt and $2.6 billion of cash net of debt as of 31st of March. We have $3.5 billion of ForEx hedges as on 31st of March, and we delivered 75.91 as a realization rate in quarter 4. We’ve guided for quarter one at 16% to 18% year-on-year growth as guidance, which converts in sequential terms to 1% to 3%. We’ll be very happy to take your questions from you.

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Kumar Rakesh from BNP Paribas. Please go ahead.

Hi, good evening, everyone, and thank you for taking my questions. My first question was regarding the recent acquisition of Rizing that you did. Thank you for the detailed explanation around that. What I wanted to understand that was a large part of the business, a significant part of the business appears to be built through acquisitions can over the last 2, 3 years. And you spoke about that this company is in a space of high growth at the cloud implementation. But financing, we look at the revenue, which we have disclosed over the last 2 years, and have been ETR appears to be about 11% within which there is a large acquisition as well. So how do you see this company operating? Or are all those acquisitions already well integrated and notice is coming from execution of integration of those acquisitions done by Rizing?

Rajan, would you like to take this question? Thank you.

Yes, I can take that. And Jatin, I hope this line is clear.

Yes, it’s better. Thank you.

So, it is true that company has had several acquisitions over the last 5 to 7 years, but we have not made so many acquisitions over the last 2 to 3 years. They made one very big acquisition of a company called Attune. Most of our acquisitions are fully integrated, and Attune is more or less integrated with the core business. And Attune has very good recovery post-pandemic, as you know, fashion and retail was the most impacted business during the pandemic. But now, as we come out a pandemic, those industries have seen very good recovery. So we are quite confident of both the quality of the asset and the quality of the recovery that we will see. This business will operate under the application and data business that we have adjacent to our SAP business. The idea is that we will drive synergies between Rizing and its existing SAP business and go-to-market will continue to serve existing clients of Rizing and look for cross-sell opportunities for Wipro in those accounts. And we’ll also look at existing clients of SAP and lead with consulting that Rizing that brings to the table.

Thank you for that. My [Technical Difficulty] you have given…

Sorry to interrupt you, Mr. Rakesh. Your voice was breaking actually. I would request you to repeat your question.

Sorry. Yeah. Is this better now?

Yes, thank you.

Thank you. My second question was about the growth outlook, which we have given 1% to 3%. Assuming that we hit about midpoint of that through the year, we could at best be doing about 10%, 11% of growth in the full year and FY 2023? Well, it would be a double-digit, but it would be a far higher slowdown in growth from FY 2022 level compared to where the industry is likely to be. So how are you seeing the growth panning out through the year? Are you expecting the growth to further salary post the first quarter or that the conclusion which I’m making is broadly correct?

So, Rakesh, this is Jatin. I’ll start and I’ll request Thierry to add on. See, we are suggesting that the growth is going to be double-digit, and double digit doesn’t end on a number it starts on 10. What I want to highlight is, we have grown 6 quarters at a 3% plus and that is a track record that we have as we enter this year. We have given a 1% to 3% guidance, and this is the natural rhythm of the business and no business will consistently grow at one specific percentage, there will be certain quarters which would be faster, certain quarters which was slower. And we have to retain that realization and what we see we guide for quarter 1 accordingly. It’s neither conservative, nor any other way that we will change our guidance.

If I can add to what Jatin said. I would say that, yes, we are – the reality is that it continues to be a story grows for now 7 quarters and 1% to 3%, the level where we feel we are comfortable for Q1. The pipeline is solid, based on the quality of our bookings over the last 2 – I should even go beyond that of the last quarters’ have been really strong as well. So that what gives us the feeling and the confidence as we are starting the year that we will certainly be able to deliver double-digit growth. As Jatin said, more to come until – more to come over the next quarters, for sure. But I think this is with confidence that we are starting the year 2023. It’s going to be another year of nice growth for Wipro.

Thank you, Thierry, thank you, Jatin, for that. Thank you.

Okay.

Thank you. The next question is from the line of Ravi Menon from Macquarie. Please go ahead.

Hi, thanks for the opportunity, gentlemen. Just a clarification on the guidance, so we’ve had that the normally Q3 to Q4 seasonality absolutely not quite play out, typically Q4 as slightly higher working days, higher holidays in Q3, until one should therefore definitely have more working days than Q4. But that doesn’t seem to be coming through in a point in demand environment. And it seems something to deal with, it says a deal and we’re seeing actual work had been should be thinking about when we do another factor.

Ravi, this is Thierry. I hope I will respond to your question. Your voice was not always clear. But I understand what we’re trying to understand is the nature of this guidance in the seasonality. What I would recommend is look at the seasonality quarter after quarter, the sequence showed growth of 5 or 6 of our competitors and us in the last 6 quarters. And you will see that we are probably if not the only one, one of the only one, to have been consistently above 3% every quarter. And the reality is that because of the nature of the contract one day or the size of an opportunity, you have some quarters a little more, some quarters a little less. I don’t think that you should read anything matter, you’re on kind of a trend between the guidance like the one we’ve given in the previous quarter, and this one, I think we are still talking about growth. And I think we keep the same level of confidence that what we had in mind several quarters ago.

Thank you, Thierry. I appreciate that clarification. Second, I will ask you about the acquisitions. You’ve done Capco, that means of BFSI. Now with Rizing, we’ve got retail. We’ve got and try to for cybersecurity. Do you think that we should see this as pretty much a loss for the large acquisitions? Or do you think there is a need to fill out certain gaps in service portfolio?

Right. Okay. Excellent question, Ravi. Frankly, the – if you look at the acquisitions, I’ll tell you first, I reflect on the acquisition that we made and then I’ll give you a view going forward. If you look at the acquisitions we have made over the last 2 years, they have all in common strategic nature, the deals we’ve made our strategy. What I mean is that we are not acquiring volume. We are not going for the sake of acquiring sizable business that will bring your scale. No, we are not doing that. We can – we are looking at companies that have a strong brand, not necessarily large companies, but company that was strong brand and bring a true domain expertise or a true ability to drive transformational deals. If you look at agile that was a consulting business in security that is reinforcing and enhancing our security practice, very successfully. If you look at Capco, it’s the best example by the way, I just to celebrate here with you, our first year anniversary of the acquisition of Capco exactly a year ago. Frankly, Capco is a very strong brand. And we’ve had the opportunity to realize the potential and the power and the quality of the talent of this team. We have been able to deliver to create together between the Capco and the Wipro teams, as many as 60 synergy news over the last one year. Capco has performed extremely well under our Lance Levy leadership in the last 1 year. And, I must say, this idea of combining our strong BFSI business with a large consulting practice like Capco, what the right thing to do. And I think we are pleased, at the time we’re celebrating this anniversary. If you look at CAS and Rizing now, the deal we just announced a few days ago. CAS, you could look at it as a small Capco, is more or less the same strategy, which is to say, adding a consulting practice that as a particular strength in a given sector in the case of CAS in the communication sector. And already now, we have opportunities, our teams from CAS and from Wipro, if I can say, are working together on some deals with clients. So it’s getting immediate traction. And then we have a very nice and solid SAP practice. But we didn’t have real consulting capabilities, Rizing brings just that. So, again, an example of an acquisition that is strategic in nature, because it allows us to have a different kind of discussion with our clients and have a lowest to go for more transformational deals that what we will typically go for before. So those are – that’s what we’ve done so far. And that’s what we will continue to do. So we do not have a number to reach. We don’t have a particular target. It’s not like we want to close the deal every now and then. But we look at what is, what kind of opportunities we see, and what kind of deal if there is a solid case for strategic move in one of our offerings of sectors will continue to look at it. I cannot better answer to your question like that.

Thank you so much for the clarification. One last kind of housekeeping question. You spoke about engineering services and really fast growth there, couldn’t share what proportion of our revenue that engineering services contributes to it?

What percent of the revenue coming from engineering services?

Yeah. Ravi, let me come back to this question. We have not disclosed it, but let me just check and come back. Thanks.

So what I can tell you is engineering, all I can say is engineering services is actually a significant practice for us. It’s getting real scale, I think we are now one of the global player in engineering services. And I’m very pleased with the growth I’ve seen in that space over the last quarters. And we continue to accelerate.

Thank you so much, gentleman. I’ll step back in the queue.

Operator, we can go with the next question, and we’ll come back to Ravi’s question after discussion.

Thank you. The next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead.

Hi, thank you for taking my question. I have 2 questions for Thierry and one for Jatin. Thierry, so why SGV [ph] growth was quite strong, the TTV [ph] of large deal win more soft in the quarter-from-quarter basis? How much of that has rub-off effect in the near-term performance? Was that one of the factors that kind of global guidance to 1 to 3 versus a trajectory of 2 to 4 in the last few quarters?

Hi, Gaurav. Well, this is – I always said that, the growing as a large strategy. It’s an important priority for us and we are gearing up to. We are – we have a nice pipeline, we have a lot of good opportunities, we have deals that we could expect to close in the next few quarters. And so we are on it. And I have zero doubt that that will trigger some nice 90s. I see it as being coming on top of the self activity that we drive quarter-after-quarter. If you look at the difference in sales of the last quarters, it’s been strong. So it’s actually been strong, but coming from smaller or mid size type of deals. We have also some large deals, but as you have seen less this quarter than also. Now, we also see that some of these things coming in terms. Okay. So sometimes clients are just not comfortable to go for lengthy commercial discussion and prefer to split the deals in different chunks and get us to start a phase rather than going through the same process. So that’s also sad that we are observing. But absolutely, our objective is to continue to get and get some of these launches in the next month.

Okay. Second question is on some of these strategic acquisitions that you have made, it looks like all of them, some of them are running independently while you have integrated needs, go-to-market. So when you really think the integration is really fully over, how do you bring it all together as one Wipro, not just in front of clients, but also in terms of the organization structure as one consulting organization.

A couple of points on that. One, we have integrated a lot of the companies we’ve acquired and they are in the – they are now completely part of the Wipro family. However, when we talk about integration, it doesn’t mean that we are merging them and completely removing the brand and so on. In the case of Capco, for example, it’s a strong brand and we really want to retain this brand, at least for the foreseeable future, because you can highly recognize in the market. Second, Capco is a consulting practice. So, we have a consulting practice inside Wipro and your objective is to combine those 2 consulting practice, but the interesting thing is not been merged the consulting practice with a technology practice those are different families. And we are managing inside Wipro with different families, right? I’ll take another example, Designit. It’s completely integrated now in organization. However, because it’s also a different family highly creative, we are keeping a different brand and they are – the capabilities, if you like the talent. The people that are in one practice, so again, they are the integration, which means integration of systems, integration of processes, legal offices and so on. Those things are not necessarily – those things are absolutely done. But it doesn’t mean that you need to do brand disappear, or that we are merging completely into our teams. We maintain the logic of families, because a consulting team is not definitive technology team, it’s not the same that digital operations team is not the same that creative teams or engineering teams.

Thank you for the elaborate answer. One question for the Jatin. What is the flexibility we are allowing ourselves to invest in manage supply side challenges in the near-term? And how should one think about consolidation of pricing with respect to impact on margins, both with respect to the amortization schedule or any integration related costs? Any particular guidance there will be helpful. Thank you.

Yeah, sure. I didn’t follow your last line very clearly, Gaurav. So can you repeat the question?

Yeah. So the question was, what is the flexibility we are allowing ourselves to invest in manage supply side challenges in the near-term? And how should one think about consolidation of the Rizing and potential impact on margin due to amortization or any integration related costs?

So, Gaurav, we have stated that our, while we remain confident about the corridor of margin that we have disclosed before and we are always talked about it in mid-term for next 2, 3 quarters, our margins would be slightly lower. And that is really the flexibility that we are retaining the growth is absolutely front and center to our strategy, and to our execution as we look at FY 2023. And, therefore, we will have to remain focused on making sure that we are doing everything to deliver an excellent growth trajectory. So we will be have retained that flexibility in the commentary, we have made or the way we have planned our year. To your second question on financial integration, or financial consolidation of Rizing, and the relative impact on the margins, it’s difficult to call out at this juncture exactly. But, you could take a proxy of our previous amortization range as a percentage of the purchase price we are paying, and I think that will be ballpark an accurate number for you to assess. And their profitability is very similar to an onsite consulting firm – a good onsite consulting firm will deliver on a consistent basis.

Thank you so much.

Thank you. The next question is from the line of Pankaj Kapoor from CLSA. Please go ahead.

Yeah. Hi, thanks for the opportunity. My first question is on the outlook that you see for the Capco business, specifically given the current macro headwinds that we see in Europe. So what kind of pipeline or what kind of a deal activity do you see for Capco? Is there any risk especially on the financial services side, which is leading to any elongation and decision making from the clients?

Pankaj, Thierry here. So, by definition, Capco has being a consulting business has a shorter cycle, if you like. And therefore, the visibility, typically, you would have on a business like this is, not in quarters, right, in few quarters. However, I would say the business continue to be very strong, very strong. In fact, I was just trading some messages with Lance, and the outlook continues to be really solid, I think this company, because of its impact, and the ability to help bank and financial institution and insurance to drive transformation program programs. They are really helping those companies to improve their productivity and address some of the efficiency challenges. And, I think, the visibility we have in the pipeline, pipeline is strong. If I look at the bookings for the quarter 4, I think, it’s been the biggest ever, they’ve done. So based on where we are now. It’s looking good. It’s really looking good for Capco.

Okay. That’s helpful. And the second question…

Yeah, Pankaj, I just wanted to add one thing, because you were referring to the European market. And indeed, there’s a significant part of the business of Capco in Europe, I would say the mix of Capco between Europe and America is significant, but the one of Wipro is as well. So here I tend to be a little bit careful, because a situation – a macro situation like the war is something that can evolve and no one knows, right? What can unfold? Based on what we are seeing today, looking at the pipeline or talking to our clients? No signs of slowdown either, right. So we stay close to it, we consulting to our clients, but today know your sign of slowdown. What do you understand?

Jatin, other question is on your large deal wins just persisting there. So it’s almost 4 quarters since we announced a major deal win, and I understand that these deals are cyclical, and it is very difficult to predict the timelines. But 4 quarter is a reasonable timeframe to look at the success of our large dealer strategies working. So just curious to know that on the large deal front, what is your initial senses, is there a kind of a calibration that you need to make mid-way to make it more effective? And the second part is that, unfortunately, since you only disclose deals, which are afford of $30 million, it clouds our optically sense of what kind of order book that you have. But how do I look at your overall order book if you can share some quantitative or qualitative commentary in terms of how that has grown on a TCG? Thank you.

So let me address the second part, which is the quality of the pipeline, and then I’ll hand it over to Stephanie, who is sitting here next to me to talk about the large deals. The nature of the quality of the order book, one, now 40% of our book today is coming from cloud is cloud-related, and that is more every quarter. And we like that, because this is really where we get a lot of growth and where this – we know that the market is continues to expand. And so there’s – we know that this is a good quality of deals, the growth we are seeing from the domain and consulting, the growth we are seeing from engineering, in particular continue to be very strong. So that is promising. What’s equally promising is the fact that 50% of the deals with closing the quarter being in partnership with some of our larger partners, right, is that in ServiceNow, AWS, Google, Microsoft, Salesforce. And those relations have clearly changed the nature other than last month’s, when I hear that [Belmont DeMartis] [ph] mentioning our name in his earnings yesterday, is something that wouldn’t have happened this study, a few quarters ago, same thing with Microsoft, same thing with SAP actually. So I think it’s a reflection of the fact that our order book is positioned in around the right parts of the portfolio, if you like. We have been working at TV on the rotation of our portfolio. And the performance in bookings report is rotation. And Stephanie, over to you.

Thanks, Thierry. We started building our large scale organization last year. And I’m pleased to tell you that it’s fully in place and operational today. And everyone on the team has a robust pipeline of opportunities. And we’re very excited about the pipeline that we are working with going into 2023. We did have some very large deals in 2022. But they haven’t materialized as the clients, as Thierry mentioned, either decide to break them up and stage them, or are still in the midst of their decision making process and determining whether single partners or multi partner is the right solution for them. So I would say, overall, our strategy is working. Our teams are disciplined and on the ground, we’re putting the full might of one Wipro behind them to help them really differentiate. And we’re very optimistic about what we’ll see in 2023.

Thank you. And just one last question to Jatin. Jatin from a full year perspective, you think that the kind of investment that we’re planning and kind of wage pressures that you have in the first half? Do you think that the margins could be significantly at a risk in FY 2023, on overall year basis versus FY 2022? Thank you.

Pankaj, difficult to look into the future, because we are also dealing with an external environment. But our commentary right now very clearly is this that the margin corridor that we discussed before, we will be slightly lower than that for next 2, 3 quarters. There is a visibility right now and I’ll stick to it and we’ll continue to talk more about it as we see how the year progresses.

Thank you, and wish you all the best.

Thanks, Pankaj. Margaret, before we go to the next question, I will also address Ravi’s question. We don’t break it out the engineering spend, engineering-as-a-services revenue of our aggregate, but specifically for this question, it is little over 10% of our revenues and it has had a fabulous year, it has grown in healthy 20s, this year as a growth. And as Thierry mentioned in his commentary on engineering it is a sector, it is an area where we remain very bullish. We are making all right investment in the space and we are looking forward to another strong year for in FY 2023.

Thank you. The next question is from the line of Dipesh Mehta from Emkay Global. Please go ahead.

Thanks for the opportunity. I just…

Sorry to interrupt Mr. Mehta. Your voice is very low. May I request you to come closer to the phone or speaker…

Is it better now? Can you hear me now?

Yes. Better. Thank you.

Sure. Thanks. My question is broadly more about clarification. You indicated about double-digit revenue growth guidance for the year. Is it organic or is it acquisition close so far? How ones to look at it?

Dipesh, the guidance we gave for the growth inorganic, it’s based on the situation we have – based on the parameter on – as up to date, right? Yeah.

Based on the acquisition, we have closed so far. Is that right understanding?

That is right, Dipesh. You’re accurately in your assessment. It is all the acquisitions which are closed as of today. That’s what we are counted. And therefore, we are not counted Rizing, which is announced but not closed.

Understand. Thanks. Second question is about the margin, slightly medium-term rather than near-term which you indicated. Now when we did Capco, we indicated our organic business will operate at 19%, and Capco because of the amortization and transaction-related costs would help 200 bps kind of impact. And over a period of time, this 200 bps impact will narrow down. So – and considering now, we are one year in that journey, and obviously supply side challenges have some implication in the near term, but how one should look medium-term margin trajectory for Wipro, because acquisition is also part of growth story for us and integral part of revenue growth whether this 17% to 17.5% is a good range to understand from medium-term perspective or how one should look Wipro’s margin reduction?

From a medium-term standpoint, Dipesh, we believe today, that 17% to 17.5% is a trajectory that we would like to hit. Yes, your assessment is right that the some of the amortization costs related with Capco would come down over the years, but not certainly in one year, at least first few years, we’ll have that impact that we have spoken about. That’s how we should see it from a medium term standpoint, as you mentioned.

Thank you.

The next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead. Sandeep Shah from Equirus Securities.

Thanks.

Yes, please go ahead.

Yeah. Can you hear me?

We can.

Yeah, thanks for the opportunity. Yes. So just 6 to 7 months back, we have issued a press release talking about $1 billion investment for building Cloud capabilities [Technical Difficulty] Can you hear me?

Yeah, we can hear you. Go ahead, Sandeep. Yes.

Yeah. Yeah. So you have released the press release, talking about $1 billion. Yeah, $1 billion worth of investments, of which $750 million will be inorganic in building the cloud capabilities. So whether Rizing is a part of the $750 million plan or this will be over and above that?

No. Look, Rizing is in the right space. And, certainly, it’s part of our cloud plus consulting capabilities, and that’s how you should see.

Okay. Okay. Thank you. That means, it’s a part of it as always. And second question and last question. Yeah. Second question in terms of margin, so even after Capco, if I look at the fourth quarter margin or the first profit margin at EBITDA level, there is close to a difference of 200 basis points. While at EBIT level, the difference is 70 to 80 basis points as a whole. So – and we are talking about the further decline in the next 2, 3 quarters from the levels of each quarter as a whole. So, the question is, growth is turning around, but operating leverage is not coming from when do you expect that to come, because FY 2023 could be a year where some of the hits on the margins are unlikely to be recovered, because of the higher wages, return to office starting cost and all that. So, is it fair to assume that 524 [ph] will be the year of operating leverage as a whole for Wipro.

Look, Sandeep, let me first start by saying that we shared a range and we operated always in that range or in fact a little higher for previous quarters until quarter four, where we are in the range at the bottom end of the range. And the second point is that the operating leverage is coming through truly, however, we are also investing additionally. So it is not that we are not being productive in the way we are spending money, but we are actually generating productivity and investing in the areas that we want to invest in. And Thierry spoke about some of those areas in his opening remarks. And, I don’t see any different in FY 2023 also, only so to say external variable for all of us to watch out and not just us as company, but as an industry is the continued pressure on talent and what we’ll have to do in FY 2023 for that and we will see how FY 2023 therefore pans out. But we are very clear that we on one hand drive efficiency that we can invest back as investment and that’s the whole strategy has been in 2022 and will continue to be in 2023.

Okay. Okay.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Ms. Aparna Iyer for closing comments.

Thank you all for joining the call today. In case, we couldn’t take your questions, you can please feel free to reach out to the Investor Relations team and have a nice weekend ahead.

Thank you. On behalf of Wipro Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.